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Chartered Accountants

Trusted advisers of all tax compliance and annual accounting issues facing both individuals and small businesses.

Changes to provisional tax

Posted on Apr 16, 2018 by admin

Small businesses, sole traders and contractors can choose a new pay-as-you-earn option rather than paying provisional tax instalments several times a year as changes to pay-as-you-earn tax have come into place this April.

The changes were made to help small businesses pay provisional tax based on their cash flow rather than the previous year’s earnings or estimated earnings for the current year. Paying provisional tax as you earn profit provides more certainty about cash flow.

This new method is known as the Accounting Income Method (AIM). It is optional and only available for businesses with an annual turnover of less than $5 million. Other options for provisional tax still remain in place.

For those who do select AIM, you will need to set it up in your accounting software before your first provisional tax payment of the 2018/19 financial year.

The first AIM payment dates are 28 May for monthly GST filers, and 28 June for two- and six-monthly GST filers, and those not registered for GST. If switching from provisional tax instalments to AIM, your final instalment payment is in early May so be prepared for the overlap in tax payments.

I would like to confirm that Garry Hughes has been my accountant for some years now and I can honestly say that I would not consider changing accountants under any circumstances. I am a USA Citizen having retired to New Zealand, therefore I require both a USA tax return completed every year as required by Congressional law and a New Zealand tax return completed every year as required by New Zealand tax law. Obviously this becomes quite a professional understanding by Garry as to what must be reported by each country and the dead lines for reporting and paying. Garry Hughes always performs a totally professional task and I have to say that I have not run into any problems with the work Garry does. I would not consider another accountant.
W. Bruce Johnson

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